What is the fundamental tradeoff faced by The Fed when responding to a negative real shock? (Three sentences or less)

When using the Fed model to diagnose the economy, if inflation rises even though the economy is weak or if it falls even though the economy is strong, then the economy has been hit by shock. an inflation a financial a supply a spending

1. Based on the most recent announcement made by the RBA Governor (see the RBA Statement on the Monetary Policy Decision for May 2023 below), identify what type of monetary policy did the RBA implement in this announcement? Which part of the AD-AS model is this policy aiming to shift and in what direction? What does the RBA’s monetary policy decision tell us about which phase of the business cycle we are currently in, and which economic indicator the RBA is most concerned about? (3-4 sentences) 2.  In its announcement, the RBA Governor refers to “the importance of returning inflation to target.” As part of your Policy Brief, explain what is meant by the inflation target and how does an inflation target contribute to good economic management? Based on the news updates that we discussed in our lectures and tutorials throughout this course, what are some factors that are currently contributing to inflationary pressures in Australia and globally, and which part of the AD-AS model are…

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Question 23 The Fed's Policies under Volcker In the years 1979 to 1982, under the leadership of Paul Volcker, the Fed adopted a tight money policy to reduce the nation's inflation rate. Based on the aggregate supply - aggregate demand model, what would happen to the price level in the long run as a result of the Fed's tight money policy under Volcker's leadership? Choose one answer below: O The price level would end up higher in the long run. The price level would end up lower in the long run. O The price level would end up at its initial level in the long run.

Suppose the Federal Reserve decides to raise its long-run target for the rate of inflation. a. How does the Fed need to change its reaction function in order to do this? b. How will this change affect output in the short run?

a. According to the Misperceptions theory, what would be the effect of an unanticipated monetary expansion shock on real interest rate (r), real output (Y), and price level (P) in the short and in the long-run? Why? Explain with details.b. Does your answer change if the shock is expected/anticipated? Why? Show how.

In order to stimulate the sagging European economy, the European Central Bank (ECB) decides to engage in expansionary monetary policy.  Your job as one of the advisors to the ECB is to explain to the public what this policy expects to accomplish.   Using a short run aggregate supply and aggregate demand graph, illustrate what happens to the overall economy as a result of this monetary policy.    Which curve shifts?    What happens to the following (up, down, stay the same): Output:             Employment:   Price levels: